All’s not well in Apple land as the company has reportedly ordered a second round of supply reduction in the wake of iPhone sales falling short of estimates. The move – said to be for all three iPhone XS₹ 88,339, iPhone XS Max₹ 98,000, and iPhone XR₹ 70,875 models – is expected to affect Apple’s multiple component suppliers as they continue to reduce their sales predictions and even lay off employees to cope with slowing demand for parts. The Apple A12 Bionic’s sole supplier, Taiwan Semiconductor Manufacturing Company (TSMC) is said to not face a significant setback due to this decision given the increasing orders for 7nm chipsets from other manufacturers like Huawei, Qualcomm, AMD, among others.
Apart from TSMC, most other iPhone supply chain partners are expected to see a decline in their revenues from November 2018 as Apple orders a second cut to iPhone production orders, according to a report by Digitimes. As for TSMC being “little affected” by this decision, the report claims that the chip supplier has several orders from other high-profile clients for its chips based on the newest 7nm process.
For instance, TSMC is currently focusing on the 7nm HiSilicon Kirin 980 SoC for the Huawei Mate 20 and Mate 20 Pro. Additionally, it is claimed that TSMC will start volume production of Qualcomm’s Snapdragon 8150 7nm chip in the first quarter of 2019, once the chipset is released early next month.
Apart from Huawei and Qualcomm, the Taiwanese chip maker is also reportedly working with AMD to produce the Radeon Instinct M160 and M150 server accelerator chips. These two chips will undergo production by the end of 2018 and will be released in the first quarter of 2019, as well.
Even other major vendors like Broadcom, Xilinx, and Nvidia have placed orders for the new 7nm chips from TSMC, making the iPhone supply cut a small loss for the company. As per the report, TSMC expects its revenue ratio for the 7nm process to go up to over 20 percent compared to 10 percent in 2018.
The story is different for other Apple suppliers, though. For example, camera lens supplier Largan Precision estimates that November 2018 revenues will be lower than those of October 2018. Additionally, iPhone flexible PCB supplier Career Technology has reportedly laid off as many as 110 workers. Yet another unnamed iPhone assembler has trimmed down its workforce to focus on lowering revenues in the wake of Apple’s decision.
The first wave of iPhone order cuts reportedly happened earlier this month. These cuts come at a time when the iPhone 2018 range is experiencing lower-than-expected demand for the Christmas quarter.